Get a copy of HTMLArea with Image Manager plugin here:
http://prdownloads.sourceforge.net/imgmngedt/htmlarea_wei_01_04_2004.zip?use_mirror=unc
According to the guys at Geeklog, there's a security risk with the image uploader. To fix it, you need to insert the following code at the top of ALL php pages:
if (!SEC_hasRights('story.edit')) {
$display .= COM_siteHeader ('menu');
$display .= COM_startBlock ($MESSAGE[30], '',
COM_getBlockTemplate ('_msg_block', 'header'));
$display .= $MESSAGE[31];
$display .= COM_endBlock (COM_getBlockTemplate ('_msg_block', 'footer'));
$display .= COM_siteFooter ();
COM_errorLog("User {$_USER['username']} tried to illegally access the story administration screen",1);
echo $display;
exit;
}